Medium Enterprises In Nigeria Research Articles

Does trade openness influence the performance of small and medium enterprises in Nigeria? A re-evaluation of the evidence

The theoretical premises of open trade predict that open economies would benefit more from trade than those in autarky. Empirical findings for Nigeria are mixed both for macro-based studies and those devoted to sectoral investigations. In this paper, we re-evaluate the evidence on trade openness’s impact on the performance of small- and medium-scale enterprises (SMEs) in Nigeria. Existing studies in this area suffer from a twin restriction; one in scope, the other in methodology. We thus employ a two-pronged analytical framework on time series data spanning 1981 to 2019. First, the autoregressive distributed lag (ARDL) methodology is used to investigate the short-run and long-run effects of trade openness on SMEs’ performance. Second, the Toda-Yamamoto causality test provides additional evidence on the direction of causality among the policy variables. Our findings show that trade openness exerts a positive but insignificant impact on the performance of SMEs. Causality test results indicate that variations in exchange rate, infrastructure, labour force and foreign direct investment influence the performance of SMEs. The paper recommends the creation of enabling environments that guarantee formidable enterprise performance amidst open trade. Specifically, there is need, among other things, for significant improvements in infrastructure levels as well as stability in the exchange rate.

Employee Retention Practices and the Performance of Small and Medium Enterprises in Nigeria

In Small and Medium Enterprises (SME) performance discourse, several factors which can improve or hinder their growth and excellence have been identified. However, the focus has been on factors related to business owners’ entrepreneurial competencies or challenges external to SMEs. Employee turnover is a major challenge experienced by SMEs, that has contributed to their abysmal performance. However, the role of employee retention practices in addressing employee turnover and its impact on SME performance has received little exposure in related literature. This research addressed this gap by examining the impact of employee retention practices on the performance of SMEs in Nigeria. Data was sourced through a questionnaire-based survey of 430 respondents and analyzed using Ordinary Least Squares (OLS) and chi-square statistic. The study’s findings revealed that employee retention practices have a significant impact on the performance of SMEs in Nigeria. For these practices to positively impact SME performance, a coherent combination of practices should be implemented. Gaps were identified in training and career development practices within the SMEs surveyed. The importance of business sector-specific factors and employees’ educational qualification to SME performance were also highlighted. The findings also reiterated the importance of non-financial measures in assessing SME performance. It is recommended that SMEs pay attention to employee retention practices to retain valuable employees and improve their overall performance.

Impact of Fintech (Financial Technologies) Usage on The Financial and Non-Financial Performance of Small and Medium Scale Enterprises in Nigeria

Small Medium Enterprises contribute immensely to the economic development of any country globally. Thus, their involvement in new innovative usage in recent times cannot be over-emphasized. Among the innovative is Financial Technologies (FinTech) which assists the enterprises to improve their performance. Therefore, this study examined the impact of Financial Technology usage on the financial and non-financial performance of Small the Medium Enterprises’ in Nigeria. The study was carried out in Oyo State, Nigeria. 381 SMEs’ were randomly selected from the 33 LGAs of the Oyo State. The data were analyzed using the one-way ANOVA analytical technique. The findings revealed that there is a significant relationship between FinTech usage and SME customer satisfaction; customer retention; turnover; and profitability. The study concluded that FinTech improves SMEs’ performance significantly. It was recommended that SMEs should continue the implementation of FinTech in business operation because its improved financial and non-financial performance.

The United Nations Sustainable Development Goals, Financial Inclusion Agenda and the Efficacy of Security Interest over Movable Assets: The Case of Micro, Small and Medium Enterprises in Nigeria

Access to credit facility by the micro, small and medium enterprises (MSMEs) in the developing countries remains a mirage without a functional, inclusive and efficient system of credit and security. The realisation of the sustainable development goals for rapid growth and economic development in those countries depends on a viable and effective financial inclusion agenda as encapsulated in one of the targets of Goal Number 9 of the United Nations Sustainable Development Goals (SDGs). As an enabler of many of the developmental goals of the UN, the financial inclusion agenda provides the link with sustainable development. This article interrogates how security over movable assets will meet the reasonable expectations of the MSMEs in Nigeria and actualise consistent funding of growing businesses.

Strategic entrepreneurship practices and performance of small and medium-sized enterprises in Nigeria

The paper examines strategic entrepreneurship practices and performance of small and medium-sized enterprises (SMEs) in Nigeria’s hospitality industry. The necessity of this study is due to strategic entrepreneurship practices and the performance of SMEs in Nigeria’s hospitality industry is being critical for providing a solution as to how entrepreneurs can exploit and explore the business environment and remain competitive. The purpose of the paper was to examine the relationship between strategic resource management and the quality of SMEs services/products, as well as ascertain the relationship between entrepreneurial innovation and increased sales volume of SMEs in Nigeria’s hospitality industry. A survey design was used as a questionnaire instrument and had been constructed and issued among 400 sampled respondents drawn from 1,294 employees from selected SMEs of the Nigerian hospitality industry, 365 respondents were filled and retrieved. This represents 91.25% of the total sample administered. The multiple linear regression techniques were used to test the research hypotheses. The results showed that strategic resource management and entrepreneurship innovation have a significant influence on the performance of SMEs in Nigeria. The result also showed that strategic resource management enhanced performance of SMEs in Nigeria and entrepreneurship innovation supports creativity of organizational performance. Therefore, managers should progressively incorporate new decision-making styles, processes, and behavior that will place a firm in a competitive and advantageous position during penetration into a new market. AcknowledgmentsWe express our gratitude to anonymous reviewers, the Journal editor, and all the authors whose works were used in one way or the other in this paper. We thank Mrs. Comfort Innocent Okoi for her untiring effort in type-setting and editing work. Our gratitude goes to the management of selected supermarkets, eateries/fastfood, hotels, and stores in Nigeria for approving prompt responses to our questionnaire instruments on strategic entrepreneurship practices and the performance of small and medium enterprises in Nigeria.

Moderating Role of Organizational Culture in the Influence of Computerized Accounting Systems on Financial Reporting Quality in Small and Medium Enterprises

The increased adoption of computerized accounting systems by small and medium enterprises (SMEs) around the world has considerably attracted the attention of researchers to studies and discussions on the subject of computerized accounting systems and their impact on various aspects of the accounting function. Extant studies have indicated the existence of a strong, positive and significant relationship between computerized accounting systems usage and financial reporting quality. Particularly, recent study conducted by Itang (2021a), which investigated the relationship between computerized accounting systems and financial reporting quality among small and medium enterprises in Nigeria, showed that computerized accounting systems usage has a strong and significant influence on the quality of financial reporting information in terms of relevance, faithful representation, comparability, verifiability, and understandability. However, studies have also shown that certain factors, such as organizational culture, could influence the relationship between organizational variables. Therefore, this study sought to extend the findings of Itang (2021a) by examining the moderating effect of organizational culture on the influence of computerized accounting systems on financial reporting quality in small and medium enterprises in Nigeria. Hence, the study introduced organizational culture as a moderating variable into Itang (2021a) study model. Organizational culture was decomposed into three dimensions, namely people orientation, innovation, and outcome orientation. The study employed the same survey research methodology and dataset that were used in Itang (2021a) in conjunction with the research data on organizational culture that were collected concurrently then from a sample of 370 firms selected randomly from SMEs in the South-South region of Nigeria, of which 223 responses were found useful. The research data were analysed using structural equation modelling technique. Five hypotheses relating to the extent to which organizational culture moderates the influence of computerized accounting systems on financial reporting quality in terms of relevance, faithful representation, comparability, verifiability, and understandability, were tested. The results of the study indicate that organizational culture significantly and positively moderates the relationship between computerized accounting systems and financial reporting quality in terms of relevance, faithful representation, comparability, verifiability, and understandability. Therefore, all five null hypotheses were rejected. Consequently, the researcher concluded that organizational culture significantly and positively moderates the relationship between computerized accounting systems and the quality of financial reporting information in SMEs. The researcher has suggested areas for further studies that would help validate and, or, extend the study’s findings. Keywords: Accounting information, Accounting information system, Accounting software, Accounting systems, Comparability, Computerized accounting system, Contingency theory, Faithful representation, Financial information, Financial reporting, Financial reporting information, Financial reporting quality, Innovation-oriented culture, Moderating effect, Organizational culture, Outcome-oriented culture, People-oriented culture, Relevance, Small and medium enterprises, Structural equation modelling, Understandability, Verifiability. DOI: 10.7176/RJFA/12-24-03 Publication date: December 31 st 2021

Influence of Computerized Accounting Systems on Financial Reporting Quality in Small and Medium Enterprises

The prevalence of diverse accounting software or computerized accounting systems and the increased usage of such systems amongst small and medium enterprises (SMEs) globally, as well as the need to present decision-useful financial reports by SMEs motivated the researcher to undertake this project. The study, therefore, sought to ascertain the relationship between computerized accounting systems and financial reporting quality in small and medium enterprises in Nigeria. The researcher modelled computerized accounting systems (CAS) as the predictor variable with five formative constructs, namely internal controls, automated data-processing, relational database, automated reporting, and enhancing technologies. The dependent (criterion) variable, financial reporting quality (FRQ), was modelled with five dimensions, namely relevance, faithful representation, comparability, verifiability, and understandability. Five hypotheses relating to the extent to which computerized accounting systems influence financial reporting quality in terms of relevance, faithful representation, comparability, verifiability, and understandability, were tested. The study data were collected using a web-based self-completed questionnaire from a sample of 370 firms randomly selected from SMEs in the South-South region of Nigeria, of which 223 completed questionnaires (60.3%) were found useful for the study. The collected data were analysed using descriptive statistics and structural equation modelling procedure with the aid of SPSS-Statistics and SPSS-Amos software. The study’s findings indicated that CAS usage has a significant positive influence on financial reporting quality in terms of relevance, faithful representation, comparability, verifiability, and understandability. CAS is also indicated to be a good predictor of financial reporting quality. Therefore, all five null hypotheses were rejected. The findings of the study also showed that the most impacted dimension of financial reporting quality by CAS is understandability, while the least impacted is verifiability. Consequently, the researcher concluded that computerized accounting systems significantly enhance the quality of financial reporting information. Hence, there is a need to encourage SMEs to adopt computerized accounting systems to improve their financial reporting quality. Management and those performing accounting functions in SMEs and finance and accounting scholars would find the results of this study extremely useful. The researcher has suggested areas for further studies that would help to validate and, or, extend the study’s findings. Keywords: Accounting information, Accounting information system, Accounting software, Accounting systems, Automated data processing, Automated reporting, Comparability, Computerized accounting system, Enhancing technologies, Faithful representation, Financial information, Financial reporting, Financial reporting information, Financial reporting quality, General systems theory, Internal controls, Relational database, Relevance, Small and medium enterprises, Structural characteristics model, Structural equation modelling, Understandability, Verifiability. DOI: 10.7176/RJFA/12-22-09 Publication date: November 30th 2021

Accounting Policies, Management Judgements And Financial Reporting Quality Of Small And Medium Enterprises In Nigeria: A Survey

The accounting policy adopted by an enterprise, together with the level of approximations done by the management in financial statements, could either enhance or impair their relevance and reliability, and by extension, the credibility of financial decisions made by users of such reports. This is because financial statements portray the financial position and performance of entities. This study assesses the influence of management’s choice of accounting policy and accounting approximations in financial statements on the quality of financial reports of Small and Medium Enterprises in Nigeria. The study was anchored on the Stakeholders’ theory. The study also adopted the survey design approach. Data were mainly collected through the questionnaire and was analyzed using descriptive statistics and regression techniques. Findings revealed that wrong approximations may affect the quality of financial reports, together with other factors. It was recommended that management of small and medium enterprises should adhere to the provisions of accounting standards when designing their accounting policies and in their judgements/approximations; in order to reduce material errors and enhance the quality of their financial report.

The Contributory Impact of Structural Components of Computerized Accounting Systems on the Systems’ Overall Performance in Small and Medium Enterprises

In today’s digital era, the application of computers and related technologies in the accounting function amongst business organizations has increased, giving rise to substantial scholarly and practical debates on the subject of computerized accounting systems. Several studies have, therefore, been conducted on computerized accounting systems or accounting information systems in recent times. However, existing studies are focused on the adoption, usage, and benefits of the systems. No extant studies has attempted to explore the structural components or subsystems of computerized accounting systems and how these components contribute to the overall performance of the systems. To fill this gap, the present study has attempted to explore the contributory impact of the structural components (subsystems) of computerized accounting systems to the systems’ overall performance. This study, therefore, decomposed computerized accounting systems into five components and, employing structural equation model (SEM), sought to determine the contributory impact of each of the components to the holistic performance and effectiveness of the systems, with a focus on small and medium enterprises in Nigeria. The quasi-experimental, cross-sectional survey was employed in the study and questionnaires were administered to 370 firms that were selected using the stratified random sampling technique. The results of the study indicates that all five components, individually, made significant contribution to the overall performance of computerized accounting systems (CAS). The study, therefore, concluded that each of the structural components of CAS, namely internal controls, automated data-processing, relational database, automated reporting, and enhancing technologies, individually, contributed significantly to the overall performance of the systems. Hence, all the five components are necessary in the design, modelling, choice, and adoption of computerized accounting systems for SMEs. The study is significant as it contributes empirically to the body of knowledge in the subject. Options for further research are also suggested for the validation and, or, extension of the study’s results. Keywords: Accounting information systems, Automated data-processing, Automated reporting, Computerized accounting systems, Enhancing technologies, Internal controls, Relational database, Small and medium enterprises, Structural characteristics model, Structural components, Subsystems, Systems performance DOI: 10.7176/RJFA/12-18-11 Publication date: September 30 th 2021

Determinants of Access to Finance among Manufacturing Micro, Small and Medium Enterprises in Nigeria

This study investigates the determinants of access to finance among manufacturing micro, small and medium enterprises in Nigeria (MSMEs). This study uses the Nigeria enterprise survey dataset conducted by the World Bank between April, 2014 and February, 2015. A robust logistic regression model has been applied for a sample of 507 manufacturing MSMEs in Nigeria to achieve this study's objective. The results indicate that access to finance is largely influenced by owner/managers' experience and owner/managers’ skills. By implication, owners’/managers’ experience and skills are the driving force for manufacturing MSMEs' probability of having access to finance in Nigeria. Therefore, this study recommends that owners/managers of MSMEs in Nigeria should leverage their stock of experience and innate skills to enhance their firms’ access to finance.

Capital investment decisions of small and medium enterprises in Benin-City, Nigeria

The study examined the capital investment decision of small and medium enterprises ( SME’s) in Nigeria. The objective of the study is to determine if small and medium enterprises in Nigeria utilize investment techniques. The survey research method was employed to carry out the study. Data were elicited through the use of questionnaires and oral interviews. These data were analyzed and presented using a statistical technique such as tables and percentages. The result revealed that most small and medium enterprises in Nigeria utilized investment techniques in their investment decision. Based on the above findings, it was recommended that SMEs in Nigeria should be encouraged to employ the services of qualified professionals or someone who has knowledge on basic techniques for investment decisions, the government should organize frequent training for SMEs on financial and investment decisions.

Microfinance banks and growth of micro, small and medium enterprises in emerging economies: Evidence from Nigeria

This study examined the nexus between microfinance banks and the growth of micro, small and medium enterprises in Nigeria. Research design method through a self-administered questionnaire to respondents was adopted for the study. The respondents comprise the microfinance banks’ management and staff and micro, small and medium business entrepreneurs, in Lagos State, the commercial hub of Nigeria. The targeted population of this study was 250 with 223 validly responded. The study tested two hypotheses using logit regression analysis. The hypothesis one shows that the null hypothesis is rejected with the acceptance of the alternate that the microfinance banks in Nigeria channelled their resources to the intended target (t-calculated of 8.181 is greater than t-tabulated of 0.000 at 5% level of significance). The findings further showed that a significant positive relationship exists between microfinance banks, proxied by Small Scale Financial Services (SSFS); Financial Sustainability (FST); Absence of Assets-based Collateral (AAC); and Advisory Services (ADS) and the growth of micro, small and medium enterprises in Nigeria. This implies that any upward movement in the services of microfinance banks will enhance the growth of MSMEs. This is further affirmed with the t-calculated of 6.540 > t-tabulated of 0.000 at 5% level of significance. Thus, rejecting the null hypothesis two and accepting that there is significant positive link between microfinance banks and MSMEs in Nigeria. This study then recommended among others, the need for government to put in place, a strong and more effective team comprises of all stakeholders, to ensure that the microfinance banks do not derail from their primary responsibility of sustaining funding for the MSMEs.

Effect of Foreign Private Investment on the Development of Small and Medium Enterprises in Nigeria

This study sought to examine the effect of foreign private investment on the development of small and medium scale enterprises (SME’s) in Nigeria. The study adopted a longitudinal research design which made the use of secondary data imperative. The study employed data on the foreign private investments and development of SMEs in Nigeria covering 1991-2018. The variables used are Net Foreign direct investment, Net Foreign Portfolio investment, percentage of foreign direct investment in Gross Domestic Product (GDP), and development of SMEs in Nigeria. The technique adopted in this study is multiple regressions to test the hypotheses. E-view econometric software 3:1 was used for the analysis. The result revealed that the value of Foreign Direct Investment (FDI) and Foreign Portfolio Investment (FPI) have a negative relationship with the development of SME’s and Foreign Direct Investment (FDI) in the percentage of gross domestic product and exchange rate have a negative and significant impact on the development of SME’s in Nigeria. It was recommended among others that government should increase its funding of small and medium scale enterprises, SME’s should be encouraged to go on public offer to expand the scope of funds, the exchange rate must be strengthened to encourage SME’s to attract funds and the needs to stabilized the economy to discourage divestment.

National Enterprise Policy Dimensions and Sustainability of Micro, Small and Medium Enterprises (MSMEs)

ABSTRACT This paper investigates the effectiveness of national enterprise policy on the sustainability of micro, small and medium enterprises in Nigeria. Previous studies focus on economic policies and managerial factors that stimulate the growth of small and Medium Enterprises. There is a departure in this study by evaluating the effectiveness of the current national enterprise policy on micro, small and medium enterprises (MSMEs) for sustainability of MSMEs in Nigeria. A cross sectional survey design was employed while the method of data collection was structured questionnaire. The data were collected from a sample of 506 respondents and were analyzed using descriptive and inferential statistics. The study finds that dimensions of national enterprise policy had significant effect on the sustainability of MSMEs. We conclude that the policy dimensions of legal-regulatory, human resources development, finance, infrastructure, marketing, technology, research and development contributed to the sustainability of MSMEs in Nigeria. We recommend that Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) should reinforce sustainability of MSMEs through capacity building programs for the workforce and owners in Nigeria. We further recommend that the Federal and State Ministries of Works should provide MSME-based infrastructure to reduce the cost of operations and thereby increase profitability levels to sustain MSMEs.

Influence of Organizational Structure on the Quality of Computerized Accounting Systems among Small and Medium Enterprises in Nigeria

This study examined the influence of organizational structure on the quality of computerized accounting systems among small and medium enterprises in Nigeria. The method employed in the research was the survey methodology with the use of self-completed questionnaires administered to accounting/finance personnel, each from the sample of 370 firms selected from the population of 9,276 SMEs within the south-south region of Nigeria. The research data was analyzed using frequencies and the Pearson Product-Moment Correlation that was subjected to a t-transformation test. The results of the study indicate that there is a positive relationship between organizational structure and the quality of computerized accounting systems among SMEs, and that, overall, organizational structure has a positive influence on the quality of computerized accounting systems. This result implies that the form of organizational structure practiced by firms play significant role in determining the quality of their computerized accounting systems. Those managing SMEs as well as other practitioners and scholars would find the results of this study useful. The researcher has also suggested areas for further research that would help revalidate or extend the outcome of this study. Keywords: Accounting information systems, Accounting information systems quality, Accounting software quality, Centralization, Computerized accounting systems, Formalization, Organizational structure, Small and medium enterprises, Quality of computerized accounting systems DOI: 10.7176/RJFA/11-22-08 Publication date: November 30 th 2020

Effect of micro finance bank on the growth of small and medium enterprises in Nigeria

Microfinance banks are key to the growth and development of small and medium enterprises most especially in the wave of turbulence and unfavorable business environment, this is due to the fact that they provide short term facilities to SMEs. The study examined the relationship between micro finance bank and the growth of small medium enterprises in Nigeria. The descriptive survey design was adopted for the study. The population of the study consists of 100 selected SME’s operators within Wuse business area Abuja, Simple random sampling technique was use to arrive at a sample size of 100. In other to address the objective of the study, structured questionnaire was employed as the research instrument used to obtain relevant information from 100 respondents and were all filled and returned. Descriptive statistics, cross tabulation and simple linear regression were used to analyze the data collected. Findings revealed that micro finance banks domestic fund transfer services contribute to the growth of small and medium enterprises, this is revealed by the regression result (Beta =0.500; P = 0.000 < 0.05). Also, the study also discovered that repayable loans provided to small medium enterprises enhances the development of their businesses as revealed by the regression result (Beta = 1.074; P 0.000 < 0.05). The study concludes that there exists a positive relationship between micro finance bank and small medium enterprises. The study recommends that customers and beneficiaries of micro finance loans should avoid default in the repayment of loans. Furthermore, Microfinance banks should avoid charging high interest and much collaterals when granting loans.

Knowledge transfer and innovation performance of small and medium enterprises (SMEs): An informal economy analysis

SME operators in the informal sector of developing economies have a significant influence on their nation's economies through their involvement in international business relationships. However, the existing deficiency in the literature to show empirical relationships between knowledge transfer, from these SMEs and their international business partners, and innovation performance is a significant gap in the strategic management and international business literature. Therefore, this paper explores the link between knowledge transfer and innovation performance of informal economy SMEs that are involved in international business relationships. The study included a survey of 370 owners-managers and managers of small and medium enterprises in Nigeria's informal electronic market. Using Structural Equation Model (AMOS 22) this study shows that knowledge transfer dimensions, such as R&D and social networking, have varying levels of impact on innovation performance of informal sector SMEs. Knowledge transfer from training showed an inverse and insignificant relationship with innovation performance. The study established implications and recommendations that will be useful for theory and practice.

The Impact of Company Accounts on Accounting Information Generation for Decision Making of Small and Medium Enterprises in Nigeria

Small and medium scale enterprises are gaining widespread acceptance as viable drivers of economic growth. However, several of these enterprises demise without fulfilling expectations due to poor management arising from weak accounting structure and information, and the studies of the impact of company accounts on accounting information generation are very few and not fully explored in the literature especially in Nigeria. This study therefore, examines the impact of company account on the generation of accounting information for decision making of small and medium enterprises (SMEs) in Nigeria. A survey research design approach was adopted through the administration of questionnaire to obtain primary data from respondents. The sample size of 151 respon-dents was drawn from 15 selected SMEs in Osun State. A stratified sampling technique was used to draw the sample. The data collected was analyzed using Linear Multiple Regression mode. From the results obtained, there is strong relationship between the company accounts and accounting information as indicated by the correlation coefficient of 0.955, 0.958, 0.962 and the p-value is less than 1% significant level (0.00<0.01), therefore null hypotheses are rejected. That means company accounts play significant role in generating accounting information for decision making of business organizations in Nigeria. This study finds that some SMEs operators in Osun State hired unskilled accounting personnel which make their accounting information unreliable and inadequate for effective decision making and very difficult to measure the performances of their business. This study recommends that government should promulgate new additional company law that will extend mandatory annual statutory preparation, disclosure and publication of annual accounts and reports of limited liability companies to other uncovered small and medium enterprises in Nigeria. Keywords: Accounting information, Company accounts, Small and Medium Enterprises. DOI: 10.7176/RJFA/11-11-04 Publication date: June 30th 2020

Influence of Strategic Factors on Early Internationalization of Small and Medium Enterprises in Nigeria

Abstract The study on strategic factors and internationalization of small medium enterprises (SMEs) has continued to gain attention across the globe as most indigenous organization desire to take their products and services to international markets. As such, this study tried to ascertain the influence of the strategic factors element of the early internationalization process and tendencies of firms going to foreign market within the period of one to five years which signifies early internationalization. Two different objectives emanated from that main goal: The first is to investigate the influence of firm orientation on early internationalization mode, and the second is to assess the relationship between early internationalization strategies and success of SMEs. Two hypotheses were tested in line with the objectives through the data collected from purposively selected twenty companies in various industries through standardized questionnaires. Both descriptive and inferential statistics was explored to evaluate the hypotheses and variable relationships. The findings reveal that strategic factors significantly affect internationalization of firms when organization put into consideration both external and internal factors towards internationalization, it further shows relationship exist between the factors and what affects SMEs from going global. The study finally recommends that SMEs should consider strategic factors as it will help them to avoid pitfalls while going international.

Leasing as an Alternative Source of Finance for Small and Medium Enterprises in Nigeria

The research work aims at exploring lease as an alternative source of finance to small and medium enterprises and by studying the challenges of SMEs in accessing leasing finance in Nigeria and whether leasing is preferred to other sources of finance in Nigeria. Relevant journals, articles, and textbooks were reviewed, most especially those relating to small and medium enterprises and leasing. The study population is the registered small and medium enterprises registered and operating in Lagos State, Nigeria while a non-probabilistic, purposive sampling method was used to select a sample size of 60 enterprises from all the major sectors in the economy with the highest from the manufacturing sector. The instrument validity was established by the research supervisor while the reliability was proven from the pilot study responses. Questionnaires were administered to collect quantitative data from the respondents, most of which are Chief Executive Owners or top-level managers in these organizations who have used or previously considered using lease finance at one point or the other. The research findings revealed that leasing is a good and alternative source of finance for SMEs operating in Nigeria. However, the results also show the challenges small and medium enterprises encounter in accessing lease finance in the country. Based on the findings, low lease awareness, poor and incomplete financial records, high cost of lease awareness, and discrimination and corruption tendencies of the financial institutions are significant factors that affect small and medium enterprises in accessing lease finance in Nigeria. It was therefore recommended that to mitigate the challenges faced by SMEs, the government must put in place programs and policies that will encourage and spur financial institutions including the lease providers to give concession to small and medium enterprises that desire to access lease finance. Additionally, Equipment Association Leasing of Nigeria (ELAN) who is the umbrella and self-regulating body of all lease providers in Nigeria should offer more educational awareness and training to lessors and lessees and to further use her position to sponsor programs, bills that will promote leasing business in Nigeria. This study is limited and focuses on only small and medium enterprises that operate in the city and state of Lagos in Nigeria. Future research should be conducted in other states of the country to further and widely test the validity of leasing as an alternative of finance and the challenges faced by small and medium enterprises in accessing the lease finance in Nigeria.